Republican leaders outline plan to replace Affordable Care Act

Three top Republican Congressional leaders released a nine page document on 5 February that outlines how Republicans might replace the Affordable Care Act should the law be repealed by legislation or gutted by an upcoming Supreme Court ruling.1

Although Republicans have repeatedly vowed “to repeal and replace” the Affordable Care Act—with the US House of Representatives voting 56 times to repeal all or parts of the law since its passage in 2010—party leaders have failed to present an alternative to the law, which has made it possible for 19 million Americans to obtain health insurance.

Now that they have gained control of both the House and the Senate, and the Supreme Court is soon to hear a case challenging the legality of the Affordable Care Act’s subsidies that currently help millions of low and middle income consumers purchase insurance,2 Republicans have come under increasing pressure to tell voters how they would replace the law should it be repealed or severely undermined by the court.

The proposal, which was released by Utah’s Senator Orrin Hatch, chairman of the Senate Finance Committee, North Carolina’s Senator Richard Burr, a member of the Finance Committee, and Representative Fred Upton, a Republican from Michigan and chairman of the House Energy and Commerce Committee, closely resembles a proposal released last year by Hatch, Burr, and Senator Tom Coburn, an Oklahoma Republican who has since retired. That proposal gained no traction in Congress and resulted in no legislation.

The newly released document proposes the passage of a Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act that would keep some of the consumer protection measures of the Affordable Care Act but would halt the expansion of Medicaid eligibility, cut back on subsidies now going to low and middle income purchasers of private health insurance, and reduce regulation of the insurance industry.

“Our proposal adopts a series of common-sense measures that do not have costly mandates, which drive up health care costs, or put the federal government between patients and their doctors,” the Congressmen wrote. The document does not provide estimates of how many people would obtain coverage under the CARE Act, nor how much its implementation would cost.

Democrats were quick to criticize the document, which they said lacked any serious proposals. Ron Wyden, a Democratic senator from Oregon and a ranking member of the Senate Finance Committee, said that the document was “little more than a lethargic rehash of last year’s unworkable ideas” and not serious legislation. “Just like last year, this ‘new’ proposal falls woefully short. It effectively raises taxes on the middle class, removes bedrock protections for consumers, and chips away at key coverage benefits that Americans rely on,” Wyden said.

Like the Affordable Care Act, the proposed CARE Act would prohibit insurance companies from imposing lifetime caps on a consumer’s healthcare costs and from dropping patients who became sick and generated high medical expenses. The proposed legislation would also prohibit insurers from denying coverage to people with pre-existing conditions, but only if they were continuously enrolled in a health plan. Those who went without insurance for two months or more would lose that protection.

For people who were not insured at the time the legislation was adopted, there would be a one-time open enrollment period in which they would be able to purchase insurance regardless of pre-existing conditions. The authors wrote that this would encourage everyone to purchase health insurance voluntarily and, thus, would replace the Affordable Care Act’s unpopular individual mandate, which requires everyone to buy insurance or face financial penalties.

The CARE Act would help low and middle income consumers purchase health services, but that help would be less generous. The Affordable Care Act currently provides income based subsidies for consumers with incomes up to 400% of the federal poverty level, about $97 000 (£64 000; €86 000) for a family of four, to help them buy private insurance on the insurance exchanges. Under the Republican proposal, consumers would receive tax credits to purchase health coverage or to purchase healthcare services directly, but the credits would be available only to those with incomes up to 300% of the federal poverty level, about $72 750 for a family of four.

Under the Republican proposal, insurance plans would not have to cover the 10 essential benefits mandated in the Affordable Care Act, which include such benefits as maternity and contraceptive care. Instead, individual states could decide what must be covered by insurance plans, and consumers could purchase plans across state lines. These provisions, the authors wrote, “would help consumers to have a broader range of options and benefit designs, and lower-cost plans through increased choices and competition.” Insurers would also be able to charge older enrollees up to five times as much as younger enrollees, compared with the threefold limit mandated by the Affordable care Act. These rations could be later adjusted by the states.

The Republicans’ proposed act would end the Affordable Care Act’s expansion of Medicaid eligibility, which has allowed about 10 million people with incomes up to 138% of the federal poverty level to enroll in the program. Instead, states would be given grants to administer Medicaid, which would return to focusing on providing medical insurance to pregnant women and low income families with children. People who remained eligible would have a choice to enroll in Medicaid or use a health tax credit to purchase some other form of health coverage. “Ultimately, governors and state legislators would have significant latitude in benefit design, program administration, provider negotiations, and the use of Medicaid funds,” the authors wrote.

The act would repeal most of the taxes and fees imposed by the Affordable Care Act to pay for the expansion of health coverage, such as taxes on insurers and drug companies and medical device makers. Instead, the act would require employees to pay tax on health benefits over a cap of $12 000 for an individual and $30 000 for a family.

The authors wrote that their proposals were “intended to lower health care costs, empower patients in their insurance choices and health care decisions, and put our health care system on a sustainable path, all while making sure that we do not add a single dollar to the federal deficit.”